Africa-Press – Eswatini. The Eswatini Revenue Service (ERS) has confirmed that it is conducting lifestyle audits on 23 individuals to recover a E47 million tax liability that they owe.
The lifestyle audit, which will reveal the individuals’ factual financial position, comes as the country revisits the fight against corruption, with His Majesty the King having challenged government to eliminate all forms of corruption.
Prime Minister Russell Dlamini followed the directive by the king with an appointment this week of the Anti-Corruption Task Team, comprising of the police, directorate of public prosecutions and Anti-Corruption Commission.
A lifestyle audit is a comparison of known income with standard of living to identify gaps and indicators that someone is living above their means.
This type of audit aims to see if a taxpayer’s income matches his lifestyle. The tax agency may investigate homes, vehicles, clothing, vacations and even charitable donations to see if the taxpayer could realistically afford his or her spending habits.
Vusi Ngcamphalala, Commissioner Domestic Taxes at ERS, revealed that they were investigating certain individuals under the lifestyle audit. He said they had 23 active cases, although he would not reveal their identities as he said the law does not allow them to get into specifics on their investigations and their nature.
Ngcamphalala was speaking during a media briefing hosted by the ERS yesterday morning, where they launched the Sondzela Sikhulume campaign aimed at fostering proactive tax compliance among individuals and businesses at ERS headquarters.
Responding to questions from the media on the efforts by ERS to go after individuals who live beyond their means, and evade taxation, Ngcamphalala revealed that during the past year the ERS accessed a tax liability of E47 million from people they were conducting lifestyle audits on. The tax liability is the amount that people owe in taxes.
He was specific that these were individuals, and not companies.
Ngcamphalala was also asked what criteria they used for identifying the individuals to conduct a lifestyle audit.
He explained that there were indicators that they receive from other agencies that alert them to an individual’s profiling.
This he said alerted them to the movement of money, inside the country or money moving outside the country.
Ngcamphalala also said they worked with other entities on the prompts that flag the individuals.
“We do not have a set amount to start questioning people’s lifestyles, but we get certain prompts from other entities, including the Financial Intelligence Unit.
ERS Commissioner General Brightwell Nkambule said they had access to third party databases.
“We compare data held by the third party databases against the returns declared. Where there are large discrepancies, we follow up. The third party database could be information collected by other agencies, or assets held in other databases,” Nkambule said.
There was a concern that the 23 people was a small number. Ngcamphalala said their unit not old, with a staff complement of about eight.
“We are still growing, will get more when we mature,” he said.
The unit which deals with lifestyle audits started working in 2015.
On the same issue, The Nation Magazine Editor, Bheki Makhubu, asked why the ERS could not protect vulnerable people against pyramid schemes if they had access to such information. He made an example of the Ecsponent collapse where investors lost over E350 million.
Director Legal Operations Henry Sukati explained that the ERS could only go as far as detecting if money was being moved illegally.
He said other agencies had the responsibility of preventing money laundering, but their work was just to see if money was being moved legally and if tax had been cleared.
“We try by all means to help, that is how far we can go,” he said.
Times of Eswatini Managing Editor Martin Dlamini asked how people could manage to move money in suspicious ways, yet ERS could trace those transactions.The ERS CG reemphasised the point that said they worked in collaboration with other entities. He said what the ERS did was check tax compliance.
Taxes
“We intervene to the point that our laws allows us. Unless it touches on taxes, even if we wished to, by law, we don’t have the power,” he said.
Eswatini Observer Managing Editor Mbongeni Mbingo questioned the ERS on how it applied the Prevention of Coprruption Act (POCA) in issues of tax compliance and in particular on the issue of the lifestyle audit.
“ERS wants everything that is taxable. Is ERS looking at those revenues from informal business?” he asked.
Sukati said the ERS taxed money that is given and received and they do not care whether the transaction was legal or not. “The person who takes should be taxed, that is how we come in. Other agencies come in and look at how people got the money. We will give a chance to the police or DPP to take care of that,” he said.
Debt relief is gone, never coming back
ERS Commissioner General Brightwell Nkambule says there will never be another tax debt relief in the country.
Nkambule said the International Monetary Fund (IMF) was opposed to the programme from the start and therefore discouraged the ERS from it. For that reason, he explained that it was clear that it would not be revisited, even if it had been successful.
“Tax debt relief programme is over. It will never come back, we were warned never to do it by the IMF,” he said. Nkambule said they explained that the country was coming out of the COVID-19 pandemic and businesses were under a lot of strife, so they introduced some relief.
“It will not come back, but our doors will always be open to hear concerns. For those companies that came through on the debt relief, there were no questions asked, we crossed out the taxes and interest. Going forward, however, the situation is that you will pay one way or the other,” he said.
Eswatini Observer Managing Editor Mbongeni Mbingo asked how the ERS would ensure that entities that had been fortunate to have their debt wiped out, such as the University of Eswatini, Good Shepherd and Eswatini TV would not fall into the same pit in the future. Nkambule said they had put up measures to avoid them owing the ERS. He said they were also assisting them to comply. He assured the media that those organisations would not owe the taxman again.
He further said voluntary compliance in the country had improved, and that the ERS could not always get compliance through strangling people. He also explained that they now had all information on all those who did not comply with paying their taxes. Nkambule said since October 2022, they have been collecting invoices from companies, and they had information even of those who have not declared.
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